HBOS has emerged as the sole institution backing Philip Green's £770m (€1.2bn) takeover bid for Arcadia, which has won the recommendation of Arcadia's management.

A spokesman for the bank said the deal was the fourth occasion it had been involved with Green, the UK entrepreneur who owns BHS. In the early 1990s, Bank of Scotland, the predecessor of HBOS before it merged with Halifax, backed Green's acquisition of Olympus Sports, the retail outlet chain.